Using Smach and SimpleActionState

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How does one define/set the action as succeeded, preempted, or aborted? Or is this set in the actionlib server using set_succeeded, etc.?

I've not used SMACH with actions, but I have been using SMACH quite a bit with services. I believe the implementations are similar, in which case you'd get the outcomes from the action server. If you wanted custom outcomes, you'd probably have to write your own state.

Do I still need to define a new class or function to handle the states or do I just have to add the states (using StateMachine.add)?

If you use the SimpleActionState, then no, you do not need to define a new class. You do have to create an instance of the SimpleActionState class and in the process fill in a few details (namely the name of the service, what goal to supply, and what states to transition to on each outcome).

Do I need to manually run actionlib servers or is this automatically run by smach?

Yes, you'll need to start them manually (a launch file might be handy here).